Euribor set to rise further as eurozone inflation hits three-year high

Consumer prices in the eurozone rose by 3.8 percent in September compared to the same month last year, marking the highest inflation rate in three years and exceeding expectations. The European Central Bank aims for a 2 percent target. Ismail Musabegovic, a professor at the Belgrade Banking Academy, predicted another increase in the euribor rate, which would lead to higher payments for euro-linked loans.

Musabegovic attributed the rising inflation primarily to energy prices, driven by conflicts between the United States and Iran, as well as the ongoing war in Ukraine. He noted that the price of gas has surged to over 720 dollars per thousand cubic meters, significantly contributing to inflationary pressures. Central banks in Europe are adopting restrictive monetary policies to curb inflation, making borrowing more expensive.

Euribor, the interest rate for interbank lending in Europe, has already seen significant increases. The three-month and six-month rates have each risen by about 30 percent since January. Musabegovic expects another rise, though he did not specify the exact increase. Borrowers with variable-rate loans will feel the impact more frequently, depending on their contract terms.

Despite the rising euribor, borrowers in Serbia are somewhat protected by legal caps on interest rate increases. The National Bank of Serbia has set limits to prevent dramatic changes in loan payments. Professor Zoran Grubisic suggested that the current increases are already factored into these legal protections, shielding borrowers from the full impact of rising rates.

Grubisic advised against rushing to refinance loans, emphasizing that long-term projections are uncertain. He noted that fixed-rate loans are not inherently bad but warned that refinancing could come with additional costs. The total debt of citizens to banks in Serbia stood at 2,187 billion dinars in September, highlighting the significance of these financial changes.